Tue. Feb 20th, 2024

Stocks Slide As US Inflation Soars

Stock markets plunged deeper into the red on Friday after data showed that US inflation soared to highest level in 40 years in May, outpacing analysts’ expectations.

In Europe, all of the major stock indices ended the week sharply lower.

Paris’s blue-chip CAC 40 lost 2.7 percent on Friday, Frankfurt’s DAX index was down 3.1 percent, Milan’s FTSE MIB shed 5.1 percent, Madrid’s IBEX tumbled 3.7 percent and London’s FTSE dropped by 2.1 percent.

On Wall Street, stocks also were deep in negative territory after US government data showed inflation reached 8.6 percent in May, the steepest rise in consumer prices since December 1981, on the back of surging energy and food prices.

“US CPI for May has come in stronger than expected,” said Stephen Innes of SPI Asset Management. “Inflation is back on the highs; critically, it’s across the board.”

The data had been eagerly anticipated as investors hungrily look for clues as to the direction of US interest rates at next week’s meeting of the Federal Reserve.

“Today’s release of US CPI underscores the need for tighter monetary policy,” said Fawad Razaqzada at Forex.com.

“As the Fed and others have admitted the need for ‘more forceful’ monetary tightening to address surging inflation around the world, this should keep the Nasdaq and other risk assets under pressure and support the US dollar against weaker currencies and gold,” he said.

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